[direwolf20]

All video encoders have bit–rate — target number of encoded bits per second — as a tunable knob. Lossiness is compensated to match the target bit–rate. When a video is encoded with a lower bit–rate, it produces a smaller file that looks worse. Resolution almost doesn't matter, if your bit–rate is so low that the encoder doesn't have a chance of encoding pixel–level detail.

Bittorrent pirates may source shows from Netflix but they may also source them from other places with higher bit–rate encodings.